Heenan Blaikie’s lesson for Bay Street: Change or die
Ralph Lean was enjoying his time at Heenan Blaikie. It was a cosy perch that kept him busy, enabling him to work his Rolodex and, more importantly to him, stick it to anyone who thinks that 68-year-old lawyers are past their best-before date. He aimed to work well into his 70s. He had arrived at Heenan Blaikie just eight months ago, having left his previous Bay Street firm because he had reached mandatory retirement age for an equity partner.
Partners of law firm Heenan Blaikie LLP, a Canadian legal powerhouse which has for years been a favourite place for retired prime ministers, premiers and cabinet ministers to spend their post-political days, have decided to wind up the firm.
Just a month ago, things were looking good. Billings had hit a near-record $35-million for the month of December. And the full-year financial results for 2013 were nothing to sneeze at, either: profit of $75-million on revenue of $222-million. There was one problem, however. Income per partner had dropped 15%, prompting other firms to poach Heenan Blaikie’s stars. The rate of departures was starting to alarm.
A firm manager met with Mr. Lean on Jan. 17 to reassure the rainmaker. There was nothing to worry about, Mr. Lean was told. “Although they had some challenges, they thought they’d be able to work them out.”
Then, just seven days later, the same manager stopped by Mr. Lean’s office again. This time the message was hugely different. The Toronto office might downsize by half, and Mr. Lean might need to switch to a bigger firm that could better serve his clients. So Mr. Lean joined Gowling Lafleur Henderson LLP last Monday, just before Heenan Blaikie announced on Wednesday that it would wind itself up for good. He’s not bitter, either. “I’ve got nothing but good things to say about them.”
Heenan Blaikie’s demise, and the speed at which it happened, is a much-needed wake-up call for Canadian law firms, legal industry observers say. Too many Bay Street firms are chasing too little high-dollar business, and too many firms rely on a star-system that makes them susceptible to the same sort of run-on-the-bank of legal talent that brought Heenan Blaikie down this week. Critics predict other big Canadian law firms will get in trouble fast if they don’t change their business model.